[Congressional Record Volume 146, Number 112 (Wednesday, September 20, 2000)]
[Senate]
[Pages S8778-S8780]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
ENERGY
Mr. SESSION. Mr. President, I see the Senator from Alaska is here. I
will just say this: Senator Murkowski understands the failure of this
administration's energy policy. He understands their desperate attempt
to blame it on everyone but themselves.
The plain fact is, for almost 8 years, this administration has,
through a myriad of ways--the chairman of the Committee on Energy and
Natural Resources well knows--reduced American production of energy,
leaving us more and more dependent on foreign oil. Now they have gotten
together, created their cartel strength again and driven up the price
of a barrel of oil in a matter of months from $13 a barrel to over $30,
maybe $35. We are feeling it in every aspect of the American
Government. It was done not on the basis of a free market supply and
demand but because of the political acts of the OPEC nations. This
administration needs to do something about it.
I am glad to see Chairman Murkowski here this morning. I know he will
be speaking about this important issue.
I yield the floor.
The PRESIDING OFFICER. The Senator from Alaska.
Mr. MURKOWSKI. Mr. President, may I ask how much time I am allotted
under the standing order?
The PRESIDING OFFICER. The Senator may have 13 minutes of the time
remaining of the Senator from Alabama.
Mr. MURKOWSKI. I thank the Chair, and I thank my good friend from
Alabama.
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He indicated that the price of oil had risen. The price of oil
yesterday rose to an all-time 10-year high, $37 a barrel. This is a
very serious matter that is not receiving enough attention by this
body, nor this administration. To give my colleagues an idea, from the
Washington Post yesterday there was a quote that the price of crude oil
contracts on the futures market on the New York Mercantile Exchange
rose above $37 a barrel for the first time.
Here is the more significant point. Analysts predicted that the price
jumps, 2.7 percent yesterday and a total of 44 percent for this year,
could continue indefinitely. I repeat--could continue indefinitely,
especially with the uncertainty connected with Iraq's Saddam Hussein
and his accusations that Kuwait was drilling near the Iraqi-Kuwaiti
border and stealing Iraq's oil.
Doesn't this sound a little like what happened in 1991 prior to the
Persian Gulf war where we had the muscle demonstration by Saddam
Hussein and later the implications of that war?
This is serious business. If you don't believe it is serious, ask
Tony Blair because the stability of the British Government is very
shaky right now as a consequence of the price of energy, a 10-year
high, expectations for the price of oil go as high as $40 per barrel
and beyond in the near future.
Why are we in this mess and why should American consumers care? I
will discuss one segment of this today because Saddam Hussein has the
world over a barrel. It is over a barrel of oil.
Why should American consumers care? Well, Iraq is now in a position
to set the market price of oil--and therefore, what you pay at the
pump, what you pay to heat your homes, what you pay at the grocery
store, and what the Northeast Corridor residents are going to be paying
in this country this winter for fuel. God help us if we have a cold
winter. Iraq is using its profits illegally for weapons of mass
destruction. They are threatening the peace and stability of the entire
Mideast region. They represent a threat to the security of Israel
without question.
Let us look at a little history on how this administration has
basically failed to address this threat. Just before the Clinton-Gore
administration came in, we carried out a very successful mission in
Desert Storm. That mission was not without American casualties. We lost
147 Americans; 467 were wounded; 23 were taken prisoner.
Since that time, we have continued to enforce a no-fly zone. We have
flown over 200,000 sorties since the end of Desert Storm, at a cost to
the American taxpayer of about $50 million per month. Yet here we are
today more reliant on Iraqi oil. We are addicted to the imported oil.
We are addicted to oil. In any event, as a consequence of our decline
in domestic production, which has been 17 percent since the Clinton
Administration took office, and a 14-percent increase in domestic
demand during the same period, we are now 58-percent dependent on
imported oil.
During the Arab oil embargo--some remember this period of time,
1973--we had gas lines around the block at filling stations. The public
was outraged. They were blaming everybody, including Government. That
was 1973 when we were 36 percent dependent on imported oil; now we are
at 58 percent.
Today Iraq is the fastest growing source of U.S. foreign oil, 750,000
barrels a day, nearly 30 percent of all Iraqi exports. We fought a war
over there in 1991. Here we are dependent on Iraq. It makes us
powerless to respond. Weapons inspections are unable to proceed. We are
concerned about it, but we don't do anything. Illegal oil trading is
underway with other Arab nations. We know it, we enforce a blockade in
the air, we don't enforce any kind of a blockade for the illegal oil
shipments that are going out of Iraq. Profits go to development of
weapons of mass destruction, training of the Republican Guards to keep
Saddam Hussein alive.
The international community is becoming increasingly critical of
sanctions towards Iraq. But consider this: Saddam Hussein puts Iraqi
civilians in harm's way when we go over and bomb his targets. Saddam
has used chemical weapons against his own people in his own territory.
Saddam could have ended sanctions at any time. All he had to do is turn
over his weapons of mass destruction; that is basically all. Yet he
rebuilds his capacity to produce more. He cares more about these
weapons, obviously, than he cares about his own people.
That he is able to dictate our energy future is an absolute tragedy
of great proportion. Still, the administration refuses to act. What
happened?
Saddam is getting more aggressive. His rhetoric in every speech at
the conclusion is ``death to Israel.'' That is what he says. What is
the threat to Israel's security? It is Iraq. He has announced a $14,000
bounty on any American plane shot down, for the anti-aircraft crew that
is responsible. Now he is accusing Kuwait of stealing Iraqi oil. Here
we go again.
That is the same thing that was done in 1990 shortly before he
invaded Kuwait. Saddam is willing to use oil to gain further
concessions. This is rather interesting, to show you the leverage he
has because of his oil production. The U.N. was set to approve a $15
billion compensation measure for Kuwait as a result of damages from the
Gulf war. That vote was set to take place next week. Iraq has
retaliated and said: No, we are not going to pay that compensation. If
you make us pay, we will reduce our output of oil. Now reports are that
the U.N. has postponed that vote.
That is their leverage. There is likely not enough spare capacity in
OPEC to make up the difference if Iraq pulls back it's production. Here
is the Wall Street Journal headline: ``Iraqi Pumps Critical Oil and
Knows It.'' That is the leverage of Saddam Hussein today, and his
leverage is growing each and every hour.
This article says:
European oil executives familiar with Iraq say the U.N.
sanctions against trading with Iraq are breaking down in the
region. Turkey, Jordan, Qatar, Dubai, and Oman are still
openly trading with Iraq. Sanctions aren't working. Now he is
strong arming the U.N.
They have put off enforcing him to make compensation to Kuwait for
the loss of damages associated with his invasion of that country. And
his leverage is, hey, I will cut my oil production. The world can't
afford to have that happen. Even if we took military action, we would
need Saddam Hussein's oil to fuel our planes and bomb him.
I would ask that the full text of the Wall Street Journal article
from September 19, 2000 be printed in the Record.
The PRESIDING OFFICER. Without objection.
There being no objection, the article was ordered to be printed in
the Record, as follows:
[From the Wall Street Journal, Sept. 19, 2000]
Iraq Pumps Critical Oil, and Knows It
(By Bhushan Bahree and Neil King Jr.)
Paris.--An international pariah for the past decade, Iraqi
leader Saddam Hussein now has the world over a barrel.
Iraq exports about 2.3 million barrels a day of crude oil
into a world market so thirsty for oil that prices have
soared recently spurring an international wave of consumer
backlash. The Iraqi exports are significantly more than the
combined spare production capacity of all other producers at
this time. So the world now depends on Iraqi oil, right?
``You're damned right,'' snapped Amer Rasheed, Iraq's oil
minister, during an interview after a ministerial meeting of
the Organization of Petroleum Exporting Countries in Vienna
last week.
Mr. Rasheed wouldn't answer whether Iraq is likely to use
its oil weapon--threatening to halt oil exports--to seek an
end, for instance, to United Nations sanctions imposed a
decade ago.
Saddam has played this game before. Late last year, Iraq
shut its oil taps in a dispute over the sanctions, and oil
prices surged.
No sooner had Mr. Rasheed returned to Iraq last week than
he accused Kuwait of stealing oil from Iraq's southern oil
fields through wells drilled horizontally across the border.
The accusation seemed ominous since it was the same charge
Iraq leveled against its neighbor before invading Kuwait in
1990. Mr. Rasheed said Iraq would take unspecified action to
protect its oil riches.
Yesterday, the Iraqi press reported that Saddam told a
cabinet meeting Sunday that even Saudi Arabia, the world's
largest oil exporter, didn't have enough spare capacity to
relieve the world of worries about an impending oil shortage.
``This is one of those serious times when the threat of a
suspension of Iraqi [oil] exports needs to be taken
seriously,'' said Raad Alkadiri, country analyst at Petroleum
Finance Corp. in Washington.
Nobody knows just what the Iraqi leader may decide to do
with his oil power. Some diplomats and industry officials
figure Saddam may seek some gains by using the
[[Page S8780]]
threat of a halt in oil exports, while others say he may
reckon that things are going his way anyway, with support for
the longstanding U.N. sanctions growing increasingly weak.
There is little doubt that Iraq is getting more assertive.
An Iraqi fighter jet two weeks ago flew over part of Saudi
Arabia for the first time in a decade, leading U.S. officials
to warn that Washington would strike back if Baghdad provoked
neighboring Kuwait or Saudi Arabia. U.S. officials have also
warned against thinking they are too distracted by
presidential politics to react.
Yet diplomats at the U.N. acknowledge that any concerted
effort to get arms inspectors back into Iraq won't advance
until after the U.S. presidential election. Hans Blix, head
of the new inspection team, made the same point to reporters
yesterday, saying ``nothing serious will happen'' until U.S.
voters go to the polls Nov. 7.
No one at the U.N. suggests that the Clinton administration
has put a hold on Iraqi diplomacy. But a spike in tensions
with Iraq, especially if it led to steeper gas prices, could
easily ripple through the presidential campaign.
European oil executives familiar with Iraq, meanwhile, say
the U.N. sanctions against trading with Iraq are breaking
down in the region. Turkey, Jordan, Qatar, Dubai and Oman are
all openly trading with Iraq, says one senior European oil
executive. ``There is a feeling that except for bombing
[against radar sites], the U.S. is turning a blind eye'' to
these transgressions, he says.
Western diplomats and industry officials say one potential
flash point is a Sept. 26 meeting in Geneva of the U.N.
Compensation Commission, which was set up after the Gulf War
to decide on claims on losses resulting from Iraq's invasion
of Kuwait. The body's governing board is scheduled to
consider a claim of some $16 billion by state-owned Kuwait
Petroleum Co., a claim that irks Iraq and may have provoked
the counterclaim that Kuwait has been stealing Iraqi oil.
The commission has already paid out more than $8 billion to
claimants. The U.N. supervises Iraqi exports of oil and
directs 30% of the receipts from such sales to fund the
commission and finance the awards. Depending on oil prices
and Iraqi export levels, the commission is getting some $400
million every month from the Iraqi oil sales. Claims on Iraq
total more than $320 billion. Though the commission's awards
are expected to be significantly below that, Iraq has long
argued that it wouldn't pay damages for decades to come.
If there is a political flare-up now that results in Iraq
halting exports, the consequences could be serious at a time
when supplies are tight, oil prices already are at 10-year
highs of more than $36 a barrel (see article on page C1), and
consumers have been protesting across Europe. ``It would be
devastating * * * the price of a barrel would double,'' the
European oil executive said.
Most OPEC countries are producing flat out to meet strong
world demand for oil. Kuwait, for instance, has made clear
that it can't even meet the latest quota increase it was
allocated as part of last week's OPEC agreement to raise the
group's output by 800,000 barrels a day. The increase was
aimed at helping to cover world demand, which is running at
some 76 million barrels a day.
Iran's output actually declined in August, perhaps because
of production difficulties at its fields. Exporters that
aren't members of OPEC also are producing as much as oil as
they can. Norway and Mexico, for instance, have both said
they are producing to capacity.
That's not to say that the rest of the world would be
helpless. Saudi Arabia and the United Arab Emirates could
produce some extra oil to offset at least part of any
shortfall from Iraq. Saudi Arabia's exact surge capacity--the
ability to produce extra volumes for a short period of time--
isn't precisely known. But given its huge capacity base of
more than 10 million barrels a day, the kingdom could produce
at a much higher rate for a short period. It also could try
to increase its capacity, which would take at least some
months.
Meanwhile, the U.S. and other industrial countries that
have strategic reserves of petroleum could release them. The
U.S. alone has some 570 million barrels of oil stored at salt
caverns, and U.S. officials say they are prepared to tap the
reserves immediately should Iraq cut off its oil exports.
``We could cover all Iraqi production for a year if we had
to,'' one senior U.S. official said.
Altogether, industrial-country members of the Paris-based
International Energy Agency have some 112 days of net import
coverage through stocks that can be released in case of a 7%
decrease in supplies from the average levels of the previous
year.
Mr. MURKOWSKI. Think about the simple equation of Saddam's influence
over the world right now. You don't have to be a mental giant to reach
any other conclusion, but we buy Saddam Hussein's oil. We send him the
money. He pays his Republican guards and builds up his biological and
chemical weapons capability. We take that oil, put it in our airplanes
and fly over and bomb him. And the process starts all over again. What
kind of a foreign policy is that?
How do we get back on course? Well, there is a solution. We have to
reduce our dependence on foreign oil. We need to go through some
avenues to do this. We need to increase our efficiency and maximize our
utilization of alternative fuels and renewables. But we also have to
increase domestic oil and gas production in this country. We have vast
resources in areas like the overthrust belt in Wyoming, Colorado, and
other States where we produce oil. We can produce more. But 64 percent
of the public land has been withdrawn from exploration. Increased
domestic supply is needed to lower prices, reduce volatility, and
ensure safe and secure energy supply.
My State of Alaska has been producing about 20 to 25 percent of all
the total crude oil produced in this country in the last 20-some years.
We can produce more. We have the technology and we can do it safely.
Give us an opportunity. Let us show the American can-do spirit. Let us
meet the environmental concerns with technology, not rhetoric.
We must increase our domestic energy supply of oil to lower prices,
reduce volatility, and ensure safe and secure energy supply. We have
legislation to do it. Senator Lott and I and others introduced the
Energy Security Act of 2000, S. 2557. If enacted, It would guide us
toward rolling back our dependence on foreign oil to below 50 percent.
That is a goal, an objective of the bill.
To meet that goal, our bill would, among other things, increase
domestic energy supplies of oil by allowing frontier royalty relief;
improving Federal oil lease management; providing tax incentives for
production, and assuring price certainty for small producers; allow new
exploration in America's Arctic, in the Rocky Mountain States, and
along the OCS areas for those States that want it; protect consumers
against seasonal price spikes, especially with regard to Northeast
heating oil users; foster increased energy efficiency, and provide new
tax incentives for renewable energy to replace foreign oil.
The bottom line is, the Clinton-Gore energy policy and our increased
dependence on Saddam Hussein is a travesty on the American people, the
American mentality, and the American memory. We fought a war in Iraq,
and now we are dependent on their resources and unable, or unwilling to
do anything about it. Saddam is leveraging the issue by his dictate to
the U.N. that he is not going to give them compensation. If they make
him, he will simply cut his production, and the world can't afford to
have that happen.
Finally, more U.S. dependence on foreign oil gives more leverage to
Saddam Hussein to threaten regional stability. The administration seems
powerless to respond for fear of cutting back on Iraqi exports. We are
in a period almost as if it was during the last year of the Carter
administration. Remember that time? We were being held hostage, if you
will. We had hostages in our embassy in Iran. This time we have a
country, a nation held hostage by Saddam Hussein.
What will the effect be? It is going to be at the gas pump and in
your heating oil bill. I haven't even talked about natural gas, and I
will not do that today. I want to remind my colleagues that we have
been talking about oil today. Tomorrow we are going to talk about
natural gas. Natural gas, a year ago, was $2.16. Today it is $5.40 for
deliveries in October. The GOP energy plan would defuse Saddam
Hussein's threat. The Clinton-Gore plan wants to stand by until the
election is over. They hope they get away with it.
That concludes the amount of time allotted to me. Tomorrow I will
talk about the price of natural gas and the effect it will have on the
economy, your heating bills, and your electric bills.
I yield the floor.
The PRESIDING OFFICER. The Senator from California is recognized, but
the Senator doesn't have any time.
Mrs. BOXER. Mr. President, I ask unanimous consent that I may use 5
minutes of Senator Durbin's time, to be followed by Senator Graham and
then Senator Dorgan.
The PRESIDING OFFICER. Without objection, it is so ordered.
____________________